Withholding, Paying, and Reporting Employee Taxes

OK! Now that we know who is who, let’s talk about the tax-related responsibilities your 501(c)(3) has toward each type of worker. We will start with employees and your organization’s duty to withhold and pay taxes for them.

Like other employers, 501(c)(3)s that pay wages to employees must pay Federal employment taxes on those wages. These taxes are:

• Federal income tax,
• FICA taxes (Social Security and Medicare), and
• FUTA tax (unemployment insurance).

Note: 501(c)(3)s are exempt from paying FUTA tax.